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tv   Nightly Business Report  PBS  August 1, 2013 1:00am-1:31am PDT

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this is "nightly business report" with tyler mathisen and susie gharib brought to you by. >> sailing through the heart of historic cities and landscapes on a river, you get close to iconic landmarks, to local life, to cultural treasures. viking river cruises, exploring the world in comfort. the steady fed, the central banks fix with the status quo. now investors will hang on every word every fed official says looking for any hint of what policy makers may do next and when. but is there a risk to talking too much? shop til you drop. tax offers are being offered to stretch the budget. navigating long-term care. the cost can be staggering, so
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can long-term care insurance premiums. the answers you need as we kick off the special series, how to navigate long-term care that and more tonight on "nightly business report" for wednesday, july 31st. good evening everyone. no change in policy and no clues on what happens next. that was the message today from the federal reserve as policy makers wrapped up the two-day meeting. the central bank is keeping interest rates at zero percent and gave no indication about its plans to tend back on the economic stimulus plan saying that the u.s. economy is growing at a quote modest pace. there was more proof of that today as the government reported the gross domestic product or gdp picked up a bit in the second quarter growing at a rate of 1.7%. that was better than expected but still pretty weak. the reaction on wall street to that economic news was pretty good, too. the nasdaq rose 10, the s&p off
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a fraction. here is hampton pearson. >> reporter: for now the federal reserve will keep buying 85 million in mortgage and treasury securitie securities. ben bernanke and his policy makers refused once again to give any hints when tapering might begin. >> i did expect they would have talked a little bit more about the program tapering. that was the thing that was missing, i think a lot of us expected that they would at least provide some kind of clarification on. even if they didn't give the exact detail. >> reporter: policy makers say the economy is expanding at a modest pace, a slight change from june when the recovery was called moderate. the fed is concerned about higher mortgage rates impacting the housing recovery. the latest gdp report shows it expanded at a faster than expected 1.7% annual rate in the
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second quarter and consumer prices holding steady, 8/10ths of a percent. the fmoc statement char rack terrorized saying inflation persistently below the 2% uld p anticipates inflation will move back towards its objective over the medium term. key short-term interest rates will remain near zero, as long as unemployment is above 6.5% and like the decision on tapering, any policy change will be data dependent. >> it depends on continued solid employment growth. the fed wants to get out of the program, will probably start tapering at it's september meeting but as employment falls off between now and then, it will push back. >> reporter: two more months of job data should give policy makers a much clearer picture
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what is happening with the market by the time the fed meets again in mid september. for "nightly business report," i'm hampton pearson in washington. >> here to talk more about the fed and economy is david kelly, chief global strategist at jp morgan funds. we come. you heard vince ryan heart say he thinks the fed wants to get out of the stimulus business and begin tapering. i was talking about a half hour ago to a former policy maker who said i don't really think they want to start tapering and probably not until the end of the year at the soonest. what do you think? >> i think they do want to get out of tapering but what they are trying to do is quietly move an elephant out of a room and you can't do that. i was frustrated by the fact they didn't put this timetable, which ben bern fan key announced in june. they didn't put that in the statement so we're wondering are they continuing to remove qes at
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the end of this year. i think they want to because they have to. people don't talk about enough is the problems they are billing. it's not just status quo. they are adding a trillion dollars a year and those are chickens that will come home to roost. so they do need to get out of it, but they are so sensitive to doing anything to upset markets, that they didn't put the timetable in the statement today. that's a mistake. they got to layout clearly if the economy improves, they will gradually get out. >> with this uncertainty on what will happen and when with the tapering, what are you doing with your investment strategy? are you changing it or tweaking it even and what's more important to you, this taper talk or jobs report? we have one coming out on friday. >> well, of course, they are connected. our general advice to people is obviously be balanced. that's the first important thing, but over time we think
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the economy is improving and will push up earnings and will push up interest rates and so you want to be tilted towards equities and fixed income and that's the same as we've said all along for quite sometime. job supports are increasingly important. the markets will be sensitive because that does tell you about when they may start. if it's a question of will they start reducing purchases in september or december, that depends a little bit on what we see this friday and also in the august jobs report, which we'll get a month from now. so those jobs reports will be very important, but ultimately, the economy is getting better and the federal reserve has to take off training wheels sooner or later. >> david, i sense you would like the fed to be more transparent and put a timetable on when they will do something. when i go back to paul and alan green span, i feel we're spoiled by the level of transparency we
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have today. that would have never been the case back then. they signal what they will do and we want them to tell us precisely when they will do it. what is your reaction to that perspective? >> overall, i think they do -- because of the extraordinary policy in place, they need to layout how to get rid of it. they opened the can of worms by having qe and saying they are going to get rid of it. they need to layout a timetable to help markets adjust. to me, it's like good parenting. you've got to be consistent in telling kids what will happen and if you tell them each time they get the picture. there is too much uncertainty in the economy. so the federal reserve -- in part, so the federal reserve needs to be clear about how they will get rid of it. i think clarity is important. go ahead. >> i was going to say i think your point about the fact these are incredible or extraordinary policy measures so it requires extraordinary explaining and signaling to the markets about
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what they will do and when. david, thank you very much for being with us. chief global strategist at jp morgan. for more, log on nbr.com and you can read my blog about it. you're golder years may have lost a lot of luster after a troubling report about under funded pensions at some of the nation's biggest companiecompan. the report out today shows a record amount of underfunded pensions for the 2012 fiscal year at s&p 500 firms. data shows a combined short fall of more than $450 billion, that's nearly $100 billion less than a year ago despite mass sir gains in the stock market. a staggering 1.2 trillion in corporate profits from america's biggest companies being held in offshore accounts to avoid taxes. a study from the watchdog research group that analyzes regulatory filings of the top
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100 publicly traded companies found 82 of them have subsid yardries in shelters like hong kong. topping the list general electric, apple, microsoft. with all that money parked overseas, it looks like investors are putting more money into bond funds. a new report from the investment company institute shows that last week more than 4 billion flowed into long-term taxable bond funds, the first time in at least a month investors put money into taxable fixed vehicles. in the same period, more than $2 billion was pulled out of municipal bond funds. when you think of banks you think of the giants, jp morgan, wells fargo, but those that hold a lot survived the financial crisis in tact and are attracting attention and new investors. >> reporter: for small banks,
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the economic recovery is an uphill battle but it appears they are starting to get a stronger engine. >> problem loans are down, new loan origination is up. we're seeing a return of purchase transactions. people are buying more homes. >> reporter: from california to north carolina, bank executives across the country striking an upbeat tone at the annual conference. consumer credit getting better, businesses starting to send slowly but surely. >> when you have a financial crisis like this, you really do have a reduction in confidence, and it takes awhile for the confidence to return. however, the underlying trend is clearly better than it was last year. >> reporter: the biggest road block, regulation, despite washington's efforts to ease the burden on bank shares of texas, ceo david says it's still piling up. >> the regulatory burden today is tougher and stronger than it's ever been. the amount of money we're spending on the regulatory
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burden, people wouldn't even believe it. i used to say 500 million wouldn't be able to make it, it may be a billion dollars now. >> reporter: when costs get too high, banks get the urge to merge like hudson city and baltimore's mnt bank but according to tom, regulators are quick to question those deals, too. >> there are tremendous economic forces that will encourage consolidation and it will be a balance between the regulatory impact. i think in that particular case, the regulars don't want to see more big, big banks. >> reporter: with mergers difficult and costs on the rise, these companies banking on a better recovery. still ahead tonight, who doesn't love a discount? tax holidays help the back to school shoppers save, but what it costs the state. how the major indexes performed during the month of
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july first. shares of herba life surged on news another big named investor is buying in. george soras revealed he has a 9% stake in the maker. bill acreman accuses the company as a classic ponzi scheme and carl icon who is evenly invested. shares rose more than 9% in today's trading. a late afternoon slump leads the market focus stories tonight. jcpenney shares tumble reporting
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the retailer is having credit problems. a commercial leader stopped supporting deliveries from smaller apparel firms. cit had no comment on the report and shares dropped more than 10% in the final hour. j.c. penney finished the day at $14.60. investors raised the glass to anheuser-busch and revenue beat expectations. north american sales fell but brazil and other markets made up for the decline there. at day's end bud gained more than 6% on twice normal volume closing at $95.71. word bill acre man's hedge fund has taken a 9% steak. he's the largest shareholder. air products gained 3% closing at $108.64. cvs reported strong profits up 11%.
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revenues rose sharply thanks to netflix and other share providers. cvs's despite with timewarner cable is still going. the deadline is friday. ahead of the earning's news cbs shares to$52.84 and gain in after hours trading. whole foods said sales grew 7.5% in the quarter and profits per share were a penny better than analyst expected. whole foods shares had a slight loss ahead of the report closing at $55.58 and dropped more after issuing a weaker earnings outlook for 2014. a big victory for retailers tired of paying swiping fees to debit card issuers. a federal judge struck down a rule for how they handle purchases made via debit cards. a group of retailers sued the
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federal reserve after a 12 cent limit caused an uproar from bank rob biest leading the fed to buckle and double that original cap. now the fed must now create a new rule and the will stay in place until it does. it's still july, but the start of the new school year is just weeks away for millions of young americans. for parents, that means back to school shopping and this year more than a dozen states are helping parents with sales tax holidays on back to school items.s. but as states struggle with budget deficits and belt tightening, are the tax breaks a good idea? >> reporter: while kids don't always love going back to school, what kid doesn't like new sneakers and fresh cry ons. parents may not love footing the bill but know it's unavoidable. 17 states want to make it a little less expensive by offering sales tax holidays.
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>> anyway i can save money for back to school clothes for there. >> i look for sales. >> i think right now all the stores should be able to have the opportunity to have a tax-free weekend and take advantage of it. >> reporter: this weekend 12 states will give consumers a break on sales tax for purchases related to back to school shopping. the limits and exceptions vary but most of the states will waive state sales tax on clothing, foot ware and school supplies to a certain amount. >> the hope is if consumers spend more money on back to school items than otherwise because of tax cuts, it benefits the prodder economy and leads to additional tax revenues elsewhere. >> reporter: however, many believe states end up being the biggest losers. retailers end up neutral but consumers can be the biggest beneficiaries. in the near term, the back to schools boost from the sales tax holiday nearly shifts purchasing, rather than adds to
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it. why do states participate? some speculate industries that benefit put pressure on the states. also, these tax holidays are popular with consumers, which helps the pop fixes that support them. massachusetts seems to have reacted to the data cutting the backseat to school tax holiday this year. >> the benefits of that boost will dissipate quickly and in fact, we may find after september has expired, sales sag a bit because a good deal of spending on back to school items had been advanced for the purpose of taking advantage of this temporary tax break. >> reporter: if purchases are shifted in time, consumers could save money if they plan the shopping carefully. over the years, holidays expanded beyond traditional classroom related purchases. this year iowa sale's tax holiday will apply to ski vests and all person property goods up
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to $2500 a person. for "nightly business report," i'm courtney regan. coming up, the rising cost of long-term care. tonight we start our special series. how to navigate long-term care with a look at when you should buy insurance to protect your financial future. first, a look at how commodities performed today for the month, oil gained almost 9%. e health, the online health insurance exchange reach add deal today with the federal government to enroll low income residents in 36 states under the affordable care act. shares shot to the highest level in more than five years today, surging more than 28% today alone. officials from the states of
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florida and georgia say health insurance rates will spike sharply higher because of the affordable care act. florida says rates will rise up to 40% for individuals and georgia said premiums for a 25-year-old male currently in a high deductible plan would nearly triple next year and could double for others. long-term care insurance is expensive and getting price seer, the reason to know what it covers, what it costs and how to shop smart. some answers tonight, how to navigate long-term care. bertha coombs reports. >> i knew that i would need long-term care. >> reporter: philis douglas bought long-term care insurance when she turned 70. it costs her $140 a month with a lifetime cap of $100,000. >> the only thing i could get was limited because of my physical conditions. >> reporter: she paid $20,000 in
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premiums over 12 years. now it's paying for a private aid at the assisted living facility where the 85-year-old live since 2010. >> i didn't want the kids to take care of me that way if they didn't have to. they do anyway. >> reporter: her son fred enrolled for long-term coverage at work after seeing how his mom's plan has helped. >> it's prolonging the point at which that money will get consumed at the high rate that she's paying out because she's paying for facilities. >> reporter: strategy reporter says to enroll in 50s. >> the premiums can be pricey but there are different policies that will allow you to change different features of the policies and make it more affordable. >> reporter: individual plan premiums can start at $2,000 a year for healthy individuals in their 50s, depending on benefit
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levels. starting at $50 a day to cover a home made to help with housework and up to $2,000 a day for living care. it's more expensive for those who are older. >> there is a 71% chance for people over the age of 65 at some point in their life they will need some long-term care services. so that alone, says that you have to have a contingency plan. >> reporter: with long-term care costs raising, insurers are raising plans and changing the under writing to take into account not just age and health but also gender. some financial advisors say women may want to consider obtaining coverage sooner rather than later because women have longer life expectancies, insurers tend to charge women higher premiums when they are older than they do men. as with car or home insurance, there is a risk of paying for coverage you won't use, but
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women like philis douglas usually do collect on long-term care claims. for her, it's been worth it. >> i believe more people should have it because they don't appreciate what's going to happen to you. >> reporter: for "nightly business report," i'm bertha coombs in new jersey. the next guest says not everyone should buy long-term insurance. he's tim mower, financial advisor. sorry for that mispronunciation. tim, what shouldn't get long-term health care insurance? >> i'll tell you, there is a spectrum of folks over the bored if you have less than 200, $250,000 or total also sets, the chances are very good the premiums you would layout for long-term care insurance would be cost prohibitive relative to the risk you're shielding also sets from because you don't have enough assets. if you end up in a long-term care situation with less than $200,000 on assets, you'll likely go through them in a short period of time and then
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medicade would step in to help you with that. now, if you have over $2 million worth of assets, you may consider self-insuring your long-term care needs. it's still possible that you could consider doing long-term care insurance as a business transaction because of the potential probability but everybody in the middle should consider some form of long-term care plan and include long-term care insurance. >> let's ask the question for those in that big vast middle, at what age should i consider buying it beginning pay for it and am i guaranteeed to qualify for it or can certain company kps collude me based on previous medical conditions or family history? >> the age i recommend is in your 50s, as i mentioned before. one thing you should know is age 50 to 55 is one age band and 55 to 60 is another. each of those are five years long for most insurance
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companies but once you hit age 60, each successive year they will increase premiums. that's definitely something to consider. because at that stage of the game you don't have the preexisting conditions that would roll you out but there certainly are preexisting conditions that would do so as we saw with philis. arthritis is one of the things that scares long-term care insurers. if someone happens to have heart disease in the genetic background, they aren't as likely to care about that. let's face it, if someone has heart disease, they will go in a moment, not spend a long time with long-term care. >> we hear so many stories of people who do get this long-term care insurance. they pay huge premiums but when they need the coverage, they are denied because for some reason that service isn't covered. can you give us tips on how to shop for the best policy? >> it's very, very important to take a close look at the policy because each policy is written differently, and that's one of the things people have been burned by. i suggest you get a policy that
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will allow 100% of the benefit to be home healthcare and look at how many activities of daily living are required for you to get your long-term care benefit. in that case, you want to take a look at the insurer to actually see their claims payment history to make sure they are paying up, and you also want to take a very close look at whether or not they have been increasing the premiums for existing policy holders. ideally, you would be with an insurer who is not. >> thank you so much, tim. >> thank you. and tomorrow our special series how to navigate long-term care continues with a further look how the insurance business is changing and what it could mean for you. >> we'll have that series all week long a good one. that's "nightly business report" for tonight. i'm susie gharib, thanks for watching. >> i'm tyler mathisen, have a good evening everybody. see you back here tomorrow night. "nightly business report" has been brought to you by. >> sailing through the heart of
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historic cities and landscapes on a river, you get close to iconic landmarks, to local life, to cultural treasures, viking river cruises, exploring the world in comfort.
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>> tonight on "quest." cheese comes in more than 2,000 varieties and can be hard, soft, fresh or aged. quest explains how the next time you reach for something to put on a cracker, you may be taking the final step in a complex chemistry experiment. and, think you can keep your emotions to yourself? psychologist paul ekman may have the science to prove you wrong. major funding for quest is provided by the national science foundation. and the corporation for public broadcasting. additional support is provided by -- the richard and rhoda goldman

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